In general attrition models that are applied to the financial industry, demographics are known to dominate the effect of the prediction. For example, for programs that require a minimum balance, most standard models tend to trend toward more affluent households who have the capability to participate. As a result, this general demographic dominates the models. Thus, more affluent households, regardless of their actual behavior and other important considerations, are generally flagged as being very unlikely to attrite.
Moreover, traditional models that control for affluence requires pre-segmentation in terms of determining cutoffs. However, the cutoffs are sometimes arbitrary. For most segmentations, there is a good amount of variability even within each segment. For example, a high affluence segment may range from total deposits of $500,000 to $5 million. Within segments, valuable information is lost between the bottom of one segment to the top of that segment.
Other drawbacks may also be present.